Life annuity

BARNES Life Annuity helps its clients optimise their asset position, for both vendors looking to improve their personal situation and buyers/investors looking for returns.

Life annuity currently represents 1% of real estate transactions in France. And the market is growing, given that it provides a relevant answer to today’s socio-economic problems.

Selling a property on life annuity offers a number of advantages: transformation of “brick and mortar” into liquid and disposable capital, a favourable tax regime, and the possibility to help family through capital transfer.

This type of sale allows clients to become an owner without necessarily having substantial funds: instead of paying the full price during the sale, the buyer (known as the debtor) only pays in part with a lump sum, known as the “initial settlement”. They then pay the remainder through regular “annuity payments” to the vendor (the creditor) until the death of the latter.

This sale is therefore based on an unknown factor: the lifespan of the vendor. The amount of the annuity payment is calculated using tables taking into account the age of the vendor and their situation: indeed, the life annuity can be on one or two “lives”, for example a married couple.

If the property is sold vacant it is known as an “unoccupied” life annuity. If the vendor continues to live in the property it is an “occupied” life annuity. The sale price is naturally lower for an occupied life annuity than for an unoccupied life annuity. In the case of an occupied life annuity, the sale agreement provides for the division of the payment of taxes, charges and works between the debtor and the creditor.
Note: an escalator clause can be added to the deed of sale for a periodic review of the annuity amount based on an index (for example, the INSEE Consumer Price Index).

A life annuity meets the needs of some investors with higher earnings. The purchase of a property at a lower cost (as it is occupied by the vendor) can be an attractive opportunity. As this type of sale does not offer any particular tax benefit, both the buyer and the vendor enter into a long-term undertaking with peace of mind, without the risk of fiscal back-pedalling. And for the vendor, a life annuity sale generally provides a welcome supplementary pension income (whether or not the vendor has significant assets).

Contrary to popular belief, a life annuity sale can apply to any type of property, including luxury properties. BARNES Life Annuity operates as the sole player in the high-end life annuity market for a French and international clientèle (foreign residents, entrepreneurs, businesses).

Our tailored approach is adapted to each situation, including occupied life annuity, unoccupied life annuity, bare ownership (which allows you to rent the property in the event of early release of the premises by the life tenant) or forward sale (which concerns younger vendors by limiting the period of payment of annuity by the debtor).